Gold price languishes near daily low amid modest USD strength; looks to US PCE for fresh impetus.

Gold price meets with a fresh supply on Friday amid the emergence of some USD dip-buying.
Trade tensions, geopolitical risks, and Fed rate cut bets should limit losses for the commodity.
Traders now look forward to the US PCE Price Index for Fed rate cut bets and a fresh impetus.

Gold price (XAU/USD) retains its negative bias below the $3,300 mark through the early European session on Friday, though it lacks follow-through selling. The US Dollar (USD) attracts some dip-buyers amid some repositioning trade ahead of the crucial US inflation report, which, in turn, is seen as a key factor undermining the commodity. However, concerns about the worsening US fiscal condition, along with bets that the Federal Reserve (Fed) will lower borrowing costs further in 2025, might cap the upside for the USD and offer support to the non-yielding yellow metal.

A federal appeals court on Thursday paused a separate trade court ruling and reinstated US President Donald Trump’s tariffs. This adds a layer of uncertainty and tempers investors’ appetite for riskier assets, which is evident from a softer tone around the equity markets. Apart from this, persistent geopolitical risks stemming from the protracted Russia-Ukraine war and conflicts in the Middle East contribute to limiting losses for the safe-haven Gold price. Hence, it will be prudent to wait for strong follow-through selling before positioning for a further depreciating move.

Daily Digest Market Movers: Gold price remains depressed amid a broadly recovering USD, ahead of US PCE Price Index

The overnight sharp US Dollar retracement slide lacks follow-through as bears seem reluctant ahead of the release of the crucial US Personal Consumption Expenditure (PCE) Price Index later this Friday.
A federal appeals court on Thursday temporarily reinstated US President Donald Trump’s sweeping trade tariffs, a day after a separate trade court deemed them illegal and ordered an immediate block.
Meanwhile, the Wall Street Journal (WSJ) reported late Thursday that the Trump administration is considering an existing law that includes language allowing for tariffs of up to 15% for 150 days.
Kremlin spokesman Dmitry Peskov said on Thursday, that Russia, so far, has now received a response from Ukraine over its proposal to hold the next round of peace talks in Istanbul next week.
White House spokeswoman Karoline Leavitt told reporters that Israel has agreed to a US ceasefire proposal. Hamas said that the terms did not meet its demands, keeping geopolitical risks in play.
Traders have been pricing in the possibility that the Federal Reserve (Fed) will step in to support the economy and deliver at least two 25 basis points interest rate cuts by the end of this year.
However, Minutes of the FOMC May meeting released on Wednesday revealed a consensus to maintain the wait-and-see stance amid the uncertainty over the economic outlook and trade policies.
Meanwhile, Chicago Fed President Austan Goolsbee noted that the US central bank could return to a situation where interest rates could come down if tariffs are avoided by a deal or otherwise.
Moreover, San Francisco Fed President Mary Daly said that two rate cuts this year would make sense if the labor market stays solid and inflation falls, but the range of possible risks is large.
Separately, Dallas President Lorie Logan said that risks to employment and inflation goals are roughly balanced. If the balance shifts, the Fed is well prepared to respond, Logan added further.
Fed Chair Jerome Powell, on the other hand, met with the President on Thursday and reiterated that decisions on monetary policy are based on the incoming economic data from the US.
Hence, Friday’s crucial inflation data will play a key role in influencing expectations about the Fed’s rate-cut path, which will drive the USD and provide a fresh impetus to the XAU/USD pair.

Gold price seems vulnerable while below the $3,325-3,326 horizontal barrier, or the overnight swing high

From a technical perspective, the overnight failure near the $3,325-3,326 horizontal resistance and a subsequent slide below the $3,300 mark favor the XAU/USD bears. Moreover, oscillators on the 4-hour chart have again started gaining negative traction and back the case for a further intraday depreciating move for the Gold price. Hence, some follow-through weakness towards the $3,280 static support, en route to the overnight swing low around the $3,246-3,245 region, looks like a distinct possibility. A convincing break below the latter should pave the way for deeper losses and expose the $3,200 round figure.

On the flip side, the $3,325-3,326 area might continue to act as an immediate hurdle ahead of the $3,345-3,350 supply zone. A sustained strength beyond could negate the negative outlook and trigger a fresh bout of a short-covering move, which should allow the Gold price to reclaim the $3,400 mark. The momentum could extend further towards the next relevant barrier near the $3,432-3,434 region.

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